Lara GuevaraSupply Chain expert (Product and Service)

Psychology that traps funders

25 Feb 2026 · 1 min

Watch on YouTube

1:28

In this concise advisory video, the speaker warns founders and product teams about the sunk cost fallacy that keeps unprofitable products alive. Using concrete examples—$40K spent on development, $25K on inventory, and two years of effort—the speaker explains that past expenditures cannot be recovered and that continuing to sell a loss‑making product only adds new losses. The core recommendation is to evaluate each product as if starting from scratch: if a new sale would not be profitable, the product should be killed. The talk emphasizes focusing on future profitability rather than trying to recoup past investments, urging honest self‑assessment for struggling products.

Chapters

We kill it, we invested $40K in development, that $40K is gone either way. The money you already spent doesn't come back. Keeping a bad product alive doesn't recover your investment, it just adds more losses on top. Here's the psychology that traps founders: we spent $40K on tooling, we already bought $25K in inventory, we invested 2 years building this, and so they keep going. Trying to earn back what they spent. But here's the math: the $40K, it's gone. Whether you sell another unit or not, you don't get it back. The question isn't, how do I recover my investment? The question is, going forward, is every new sale profitable? If the answer is no, you're just adding new losses to old ones. The $40K becomes $50K, then becomes $60K. The sunk cost fallacy is one of the most expensive psychological biases in business, especially in B2C. The way out? Ask yourself this question: if I were starting fresh today with no history, would I invest in this product? If the answer is no, it's a kill. The past doesn't matter, only the future does. For your struggling products, ask, if I were starting fresh today, would I invest in this? Be honest. Common truth, if this hit, we all have that one product.